Ford Lowers Its Earnings Forecast for Year

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http://www.nytimes.com/2005/04/09/automobiles/09ford.html?pagewanted=print&position=


Ford Lowers Its Earnings Forecast for Year

DETROIT, April 8 - The Ford Motor Company lowered its earnings forecast for the year on Friday, citing higher gas prices and rising health care costs. The company said it would also abandon its goal of $7 billion in pretax profit by 2006, a cornerstone of the turnaround plan that its chief executive, William Clay Ford Jr., put in place after he took control in 2001.

Ford, the nation's second-largest automaker, now expects to earn $1.25 to $1.50 a share for the year, down from its previous guidance of $1.75 to $1.90 a share.

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Friday's announcement was the second from a Detroit automaker in recent weeks that reinforces the dim outlook for American automakers. Last month, General Motors cut its earnings forecast for the year to a range of $1 to $2 a share, down from $4 to $5 and said it would lose close to $850 million in the first quarter alone. That announcement put G.M.'s already tenuous investment-grade rating in further peril as Standard & Poor's put the automaker on negative outlook, indicating it could cut G.M.'s rating to junk status.

The reaction to Ford's pared-down earnings guidance was similar. Standard & Poor's, which currently rates Ford at its lowest investment-grade level, revised its debt rating outlook to negative on Friday and said it could cut Ford to junk status at any point if it determined the company was not poised for a turnaround.